Identity theft is one of the fastest growing crimes globally. Identity theft is one of the major reasons for bad credit and lack of access to financing. Both credit freezes and fraud alerts can be used to protect your access to credit. However, each method is used for different purposes and in this post you will learn the difference between the two.

Fraud Alerts

Fraud alerts are typically alerts to any party going through your credit file. It is a signal to any credit grantor that you are or may have been victim to a suspicious activity. Fraud alerts enable credit grantors to take extra caution in accessing the legitimacy of a credit request. The credit grantor will contact you before approving new credit.

Types of Fraud Alerts

Initial Fraud Alert: This alert is effective for a period of 90 days and can be placed if you deem that you are at a risk of being a victim. Once the alert is in place, any credit activity request on your name must be authorized by you.

Military/Active Duty Alert: This alert can be undertaken when you are going on active military service away from your usual station. The alert is similar to initial fraud alert only that it is effective for a whole year.

Extended Fraud Alert: This alert can be placed when you realize that you are a victim of fraud or discover evidence of the same. It remains effective for seven years and creditors have to verify all requests by contacting you.

It is considerably easy to place a fraud alert as compared to a freeze. You just need to call a credit agency and request them to place a fraud alert on your file.

Credit Freeze

A security freeze just as the name suggests, enables you to keep away information on your credit file from third parties. This means that for lenders to get access to your file, you have to give them permission through a process known as “thawing” your file using a code. It is safe as it keeps identity thieves from opening new accounts in your name.

However, you should note that even with a freeze, certain situations will still allow for your file to be disclosed. For example organizations that you are in business with such as you telephone service provider, credit card provider, or mortgage. You will also still be in the list for offers of prescreened credit. In some states even landlords, insurers, and potential employers can access your file.

To put in place a credit freeze, you need to make a request in writing to all credit reporting agencies using a certified letter. In the letter include your social security number, name, and address. You will then be issued with a pin number to access your file.

Freezing or unfreezing credit may take some time and should only be undertaken if you won’t be seeking a new job, moving out, or applying for credit in the near future.

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